The Timeout and Error LED’s are on, is my new AIS unit faulty?

This is expected behaviour for your new AIS device, both these LED’s will stay on until you program your MMSI number into the unit. Once the MMSI number has been programmed, and after powering up the unit, the Timeout LED will stay for a few minutes whilst the GPS acquires satellites then this will extinguish and the green Status LED will light.